Corn: Late plantings risk falling yields

The March 27 USDA US Planting Intentions and Quarterly Stocks Reports broke the back of the corn market...well, sort of. The two reports showed that more acres than expected will be planted and that March 1 stocks stood at considerably higher levels than analysts had forecast, respectively. Prices fell sharply. There has been a lot of noise since those two reports were released – including a rally back to pre-report levels – but prices have since fallen back to the lows.

The April 11 USDA crop report was a non-confirmation of the stocks report, though, because the estimate for domestic feed was not as weak as analysts had expected, which created some confusion. The crop report seems to be the more accurate reflection of the current old-crop situation. Spot corn prices are still trading 50¢ per bushel above May futures, indicating that the market remains tight. It is widely expected that 2012-13 ending stocks will remain scarce until new-crop supplies are available in the fall.

Attention has therefore turned to new-crop issues. The early part of the planting season has been a disaster. Heavy rain in some regions and late snow in others resulted in very wet fields that did not allow farmers to start planting their crops. The May 6 weekly planting progress report showed that only 12% of the crop had been planted. That is down from the five-year average of 47% at this juncture of the season and dramatically below last year’s 69%.

There is drier weather in the forecast that should allow some serious catch up. The concerns are that the late planting could result in some yield loss, and in some regions, the planting window could close completely, forcing farms to plant soybeans or cotton instead.